OncoGenex Waits, and Waits, For Data on Prostate Cancer Drug

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Pity Scott Cormack. As the CEO of an aspiring prostate cancer drug developer, he’s got to answer to the masters at the FDA and the cancer physicians who want unequivocal, long-term data to prove his company’s product works. His other masters, those on Wall Street, want to know the answer by next Monday.

Naturally, Cormack and his team at OncoGenex Pharmaceuticals took the only sensible option they had, aiming to create a rock-solid data set. But that means that its investigators, employees, patients in trials, and its investors are all going to have to do something so unusual in our age of instant gratification—they have to wait.

To make matters worse, Cormack, 46, has had to watch as no fewer than five competitors have made leaps ahead in the treatment of prostate cancer over the past couple years, while his most important trial has been enrolling, enrolling, enrolling patients.

As Bothell, WA, and Vancouver, BC-based OncoGenex (NASDAQ: OGXI) prepares for its second quarter financial update today, there’s little it can say that will steal back the buzz. The OncoGenex storyline hasn’t changed much in the past couple years. This little company of about 40 employees, with no drugs yet on the market, placed its biggest bet in September 2010 when it started a 1,000-patient clinical trial called Synergy. It expects to spend a little more than two years enrolling patients, and will need to do another year of follow-up analysis to see how well patients do on the new drug versus those in the control group. The answer from the study is expected before the end of 2013. That means OncoGenex could end up spending 1,200 days of waiting in suspense—give or take a few hundred days—to see whether its drug can help men with terminal prostate cancer live a few months longer with a reasonably better quality of life.

If OncoGenex nails that clinical trial, it will at least be in the conversation with higher-profile companies like Seattle-based Dendreon (NASDAQ: DNDN), New Brunswick, NJ-based Johnson & Johnson (NYSE: JNJ), San Francisco-based Medivation (NASDAQ: MDVN), South San Francisco-based Exelixis (NASDAQ: EXEL) and Norway-based Algeta. Until then, there’s just not going to be a whole lot to get analysts excited about. So until those results arrive, OncoGenex continues to putter along with a market valuation of about $200 million, and average trading volume of a puny 50,000 shares a day.

Scott Cormack, OncoGenex's CEO

“It’s all catalyst-driven in the stock market,” Cormack says, with a shrug, acknowledging the lack of an instant catalyst. “As you go into these big Phase III trials, they take a few years to accrue and get data.” Translation—everybody is just going to have to wait a while for the precious data.

OncoGenex has sought to maneuver into a niche so its drug, custirsen (pronounced CUE-stir-sen) can be approved by the FDA, and have a shot in the marketplace. Other companies like J&J, Medivation, and Dendreon, are going after a larger pool of patients who have stopped responding to traditional hormone deprivation therapy, but who haven’t yet progressed all the way to chemo—the so-called “pre-chemo” population. Some of those drugs and others have been tested in the last-ditch patient population, among people whose disease has gotten worse after chemo—the so-called “post-chemo” population. OncoGenex is one of the few aiming to position itself in the middle, with a treatment that’s taken in combination with chemotherapy, which you could call the “with-chemo” population.

One of the big risks for OncoGenex is that the other companies will make so much progress in the “pre-chemo” population, that there may not be that many patients left to sell to in the chemo population. Dendreon and Johnson & Johnson have shown in company-sponsored clinical trials that they both can extend lives by a median of about four months, and Medivation is positioning itself to possibly upstage both of those companies in that patient group. Plus, since many men with advanced prostate cancer either choose to forgo chemotherapy because of the side effects, or can’t take it because they’re too frail, it’s an open question how many patients would opt for the OncoGenex treatment in tandem with chemotherapy. Cormack says as many as 50 percent of men eligible for chemotherapy end up getting it, which he says translates to an addressable market of about 34,000 men in the U.S.

Given how much improvement has been made for prostate cancer patients, there’s a good chance many of them will end up dying from some other cause before they end up progressing to the point of considering a chemo drug combined with the OncoGenex product, says David Miller, the president of Biotech Stock Research in Seattle.

Miller follows prostate cancer drugs from the other companies, but not OncoGenex, partly for that reason. “The [OncoGenex] drug may or may not be a good drug,” Miller says. “I really question whether there’s a substantial market there.”

Still, that question will take on greater urgency two or three years from now if OncoGenex is successful. Before digging into that further, a little bit of science and medical background is required to understand what’s interesting enough to keep OncoGenex in the hunt.